"Participation Builds Unity"
"MADE IN AFRICA - FOR AFRICA"
"Participation Builds Unity"
"MADE IN AFRICA - FOR AFRICA"
ENDORSED
THE BLACK BUSINESS SUMMIT
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29 - 31 JULY 2003
SANDTON CONVENTION CENTRE
SANDTON - SOUTH AFRICA
A number of interesting issues were addressed which may ultimately contribute
in the transformation of AFRICA BUSINESS into global corporations through structured
Black Economic Empowerment!
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Outcomes Document
Overview
Keys point emerging from the conference:
* Networking, collaboration and partnerships are crucial – South African companies must start to work together to meet the challenges and to create wealth
* Black economic empowerment should be regarded as a strategy for business growth and survival – not a legal requirement
* Black economic empowerment is a long term commitment to the future of this country and an investment in expanding our domestic consumer market
* The resources for training, business opportunities and finance are available – what is required is a proactive, creative and never-give-up approach from (black) business to access these resources
* Business must take up the challenge of assisting black entrepreneurs and participate - not necessarily through funding such as Corporate Social Investment – but also in terms of skills, time, know-how, advise, support (letting an entrepreneur use unutilised office space etc)
* The private sector should proactively and creatively engage in black economic empowerment to avoid government having to intervene with regulations and legislation
The first day of the conference was opened by the Chairman, Peter Metcalfe, CEO of the Foundation for the Development of Africa (FDA). Mr Metcalfe shared his internet research findings: when searching for “Black Business” there are 6,180,000 websites on the worldwide web that touches on the subject in one way or another. However, most of these sites are American. When searching for “Black Business Africa”, the search engines results show 1,800,000 sites. The FDA’s site ranks number one - This website aims to increase understanding of black business and empowerment – a concept foreign to the rest of Africa, who focus on “economic empowerment”.
The website address: www.foundation-development-africa.org
Mr Minty discussed Nepad as a development programme of the African Union and an African initiative, controlled by Africans to achieve sustainable development on the continent through:
Nepad’s main objectives include:
The support of business is required to create macroeconic reform and to meet the needs for:
What Business can do:
The Department of Foreign Affairs website address is www.dfa.gov.za and the Nepad and AU websites can be accessed via this website.
A delegate posed the scenario of a recent software tender in which the top five tenders considered were international companies, while the skills were undoubtedly available in Africa.
Mr Minty responded by saying that private sector should look at the overall ITC areas and used as an example the need of African goverments for safe and secure communication systems, for which funding is available through the UNDP programme, the EU (capacity building and infrastructure) and from Japan. He said that the funding is available, but the problem remains in tapping the available resources and structures to allow the resources to be implemented.
Mr Minty also used the example of health care and the joint venture opportunities available with India but said that the government was incompetent in matching available resources to African service providers. He said that the government will assist companies that reach out and develop partnerships.
Mr Musikavanhu demonstrated with graphics and graphs the cost of apartheid in terms of South Africa lagging behind in the global economy as measured by Purchase Price Parity (PPP), in response to the perception that BEE costs money and is a waste of money.
He said that a large middle class created economic stability, which leads to lower interest rates, which makes it easier for entrepreneurs to start up, driving economic growth. It is therefore in the interest of all South Africans and especially business to buy into the concept of black economic empowerment to ensure we build a strong middle class to support a vibrant economy. The secret to this is education and training.
But black empowerment just for the sake of the rewards is not the answer. The sustainable answer lies in transformation and corporate reformation. The first step is reforming our thinking, then sowing the seeds of equality, removing structural limitations, dealing with impediments to reformation, creating the environment necessary for change, implementing reformed systems, after which the benefits can be reaped.
What Business can do:
The agricultural sector is the most labour intensive economic sector and should receive much attention in terms of empowerment, skills and technology transfer and training and education.
Economic Reform in South Africa has the following benefits to business:
The comment was made that government has been making progress in this area, as can be seen in the Eastern Cape.
Chairman Peter Metcalfe commented that one area that needs consideration is the export of raw materials and not finished products.
Mr Kolane said that government is there to facilitate investment, as business should be the ones to make the investment decisions.
Mr Kolane discussed facillitating trade in the SADC region as part of South Africa’s global economic strategy.
The DTI facilitates economic development through:
He said that South Africa’s economy is linked to the SADC regional economy and that investment, not just trade from South African business into the region will create long-term sustainable development. Investment will result in:
The DTI does the following to promote Spatial Development Initiatives (SDI), in response to the great problems faced, such as logistics and lack of infrastructure in African trade:
This is done by:
It is necessary that business take the opportunities made available by the DTI in Southern Africa:
Bilateral focus areas:
Challenges:
Country Briefings with detailed information is available from the DTI.
A delegate posed the question that trading outside SA neglects BEE in South Africa. Mr Kolane answered that if there are no market for South African products, wherther from black or white companies, BEE investment will make no sense. Intra-African trade must increase for both black and white companies. The Enterprise and Development Unit drives BEE in the domestic arena.
The example of the ban on beer and fruit juice imports into Nigeria was raised and Mr Kolane said that South Africa cannot interfere when a government makes such a decision.
A delegate raised a concern that there is a lack of information about DTI projects especially in the rural areas. Mr Kolane responded by saying that they are making efforts to improve the situation and recently did a provincial outreach to inform provincial government about the DTI projects. He said that if an organisation could benefit from a DTI presentation, that can be arranged. He also advised businesses to join organisations such as export councils, who have access to the DTI information.
Chairman Peter Metcalfe commented on the BGOAE exhibition as an example of the DTI bringing potential investors and markets to the South African business sector.
Ms Ngwenya explained aspects of the Competition Act. The Commission investigates and refers complaints and large mergers to the tribunal, who will then conduct hearings and makes decisions. The Appeal Court will hear appeals against Tribunal decisions.
The Competiton Act serves to:
Information available on the website - www.compcom.co.za
Services provided by the Competion Commission:
The question of differential pricing was raised. Differential pricing is not allowed in terms of the act, unless it can be justified in terms of better negotiating skills or such valid argument.
PPPs, used correctly, is a useful service delivery option that provides operational gains and strategic clarity, as resources are used more effectively by government departments.
Criticism against black business was detailed – especially in the lack of understanding tender procedures and a failure to address stipulated tender criteria.
Mr Appanna made recommendations as to how companies should present their tender proposals, including:
Project funding was discussed in terms of the difference between Public, Corporate and Project funding.
Mr Appanna further commented on the fact that tender boards are seldom called on to specify their credentials and why they are qualified to make the decision on awarding the tender. He stated that it is the right of the public and business to know what qualifications the tender board has and that they also have a right to feedback regarding why a tender was lost.
Delegates also aired the following viewpoints:
Mr Appanna responded that transparency is a problem and that measures taken to improve the system have been faced with many problems. He said that decentralisation of the process back to local governments and agencies would make a difference.
He also said that a document detailing information about the rights of tenderers, the “rules of the game” and the recourse actions available would be a great asset.
What Business can do:
What business can do:
To improve access to funding, entrpreneurs must:
To improve your chance of success, ensure you cover some generic criteria by demonstrating:
Mr Frost briefly discussed various funding sources ranging from “Family and friends” to Private equity and venture capital, as well as three types of funding: Debt, quasi equity and equity. Different funding structures were considered as well as the investor risk vs the cost to the entrepreneur.
Mr Frost made the following suggestions when looking for finance:
Mr Lyons presented a case study detailing how his company dealt with empowerment related investment banking.
Mr Botha said that the Digital Divide can be bridged by turning technology disadvantages into opportunities, utilising technology to create economic viability.
Mr Botha said that the Digital Divide has three dimensions:
What business can do:
Technology enables business processes and economic viability. Companies must refocus on their core activities.
In the Digital/Information age new rules apply:
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The Foundation for the Development of Africa
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"Sustainable Development is the action and/or act of bringing people
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WebPage last revised: 25/09/2009
Black Business Summit 2003
28-29 July 2003
The two-day summit was attended by a diverse group of business people.
DAY ONE
Brief feedback detailing useful information from the presentation made and practical advice from the speakers:
Dr Eugene Lottering briefly introduced the Innovation Fund, which includes their investment vehicles: TAP (Technology Advancement Programme) and MiTech (Missions in Technology). Both TAP and MiTech are calling for proposals to invest in technologically innovative Research and Development projects. Full details are available on their website www.innovationfund.ac.za.
Mr Abdul Minty, Acting Director General, Department of Foreign Affairs
Ensuring the success of Nepad and the African Union: Strategies for participation to benefit South African Businesses
* Commiting governments in Africa to the promotion of peace, security, good governance and co-operation throughout the region
* Sectoral priorities including infrastructure development, human resource development, agriculture, environment, science and technology
* Mobilisation of resources including capital flows and market access
* Eradication of poverty
* Sustainable growth and development for African countries
* Halt the marginalisation of Africa in globalisation
* Empowerment and economic integration of women
* More and better skills
* More efficient allocation of capital
* More emphasis on job creation
* Support for development of small and medium businesses
* High levels of spending on research and development
* Regard relationships with Nepad as partners, not as customers or investors, prepared for a long-term commitment
* Establish networks to bring about co-operation among African business enterprises to share experience, expertise and promote African development
* South African business could intervene by providing support to African governments to achieve best practise standards of economic governance by sharing experience and seconding skills
* Continental relations with business associations are critical to regional and continental integration
* South African business must emphasise production along with the expansion and diversification of supply of commodities, goods and services to be able to respond to new market opportunities
* Good corporate governance will ensure efficient and improved quality of production to compete at global level. It will also ensure strategic thinking which will result in the identification of market niches and areas of competitive advantage
* Deepening economic activity through the appropriate reforms while the private sector creates strong and stable environments where business can thrive.
* Greater cooperation between African Businesses
* Promote inter-African co-operation and development
* Tap current resources
Mr Minty said that opportunities for the private sector can be accessed via their website and mentioned as an example the Ground Water Management Programme.
He also mentioned that workshops introducing the private sector to these opportunities could be useful.
QUESTIONS
Tendai Musikavanhu, CEO, Umbono Fund Managers
Economic reformation in Africa: The private sector’s responsibility
* This process requires that window dressing is removed and that there is a strong focus on skills and technology transfer
* Companies could mentor small (previously disadvantaged individuals) PDI firms
* Make a long term commitment by developing markets through community development - “teaching a man to fish” - training entrepreneurs within and outside the company
* The economy and consumer market will increase
* Internal stability will increase and crime will decrease
* Private sector initiatives replace the need for government intervention
* The socio-economic situation will improve substantially
QUESTIONS
In response to a question about the decentralisation of initiatives and capital from Gauteng, Mr Musikavanhu replied that markets become gravitational centres – the best attracts money, the second and third best get a small share and the rest are ignored. As Johannesburg grows as an economic hub, it will continue to attract business, sucking capital from other regions. The solution lies in government policies, created in conjunction with the private sector, such as those used in Egypt and Dubai. In Egypt, tax holiday havens were created to decentralise business from Cairo. The most important factor is that infrastructure must be provided first in the tax haven areas.
He added that alleviating poverty is a noble cause, but that it would be in the interest of all of Africa to create wealth instead of merely alleviating poverty. It is imperative that Africa partners with herself first.
Bruce Kolane , Chief Director: Economic Development (Africa and Middle East), Department of Trade and Industry (DTI)
Key success factors for black and non-black business in maximising foreing direct investment in the SADC region
* Promoting outward investment targeting critical industries
* Trade and infrastructure development
* Institutional capacity building (eg helping governments to review old trade agreements)
* Investing in the continent, transfering and exporing technology and technical expertise into Africa
* Opening South African markets to address trade imbalances
* Promoting economic integration through intra regional trade
* Creating a condusive environment for trade
* Greater market access for South African exports to grow the South African economy
* The region as a whole will increase its global market share, increase competitiveness and redress the global trade imbalances and trade with strings scenarios
* Create employment and growth
* Develop a common African position in multi-lateral forums
* Keep African markets open to South African products (unlike the beer and juice import ban now existing in Nigeria)BR>
* Develop conditions conducive to SDI
* Prioritise the most promising sectors for development
* Facilitate the implementation of anchor projects (eg the smelter project as part of the Mozal project) as a way to repay investment
* Facilitate public-private partnership
* Provide integrated solutions to economic development
* Sending fact-finding and technical missions to do feasibility studies
* Linking business through joint venture partnerships (workshops and roadshows)
* Capacity building and technical co-operation
* Government to government trade
* Enable a legal framework (trade and investment agreements)
* Capacity building – implementing standards to facilitate ease of trade
* Intra-Africa Trade plan – when Africa trades with itself, investment will follow
* Private sector mobilisation
* North Mozambique Power Pool
* SDI Infrastructure Project
* SADC Cotton Pipeline
* AGOA JMI
* Market access
* External (WTO)
* Internal (Intra-African)
* Trade facilitation
* Export finance
* Customs
* Logistics
* Ports and documentation
* Standardisation
* Export promotion
* Economic integration – rail infrastructure to link the region
* Harmonise documentation
* Identify cross-border projects
* Complement outputs
* Expand financial base
* Role of WTO, UNTAD in building capacity
* Development of complementary industry strategy
* Build regional institutions
* Investment not just trade
* Medium to long-term projects
* Forge partnerships not competition
* Standard business procedure – proper accounting practises
* Regional corporate practise standards as directed by Nepad
* Effective communication strategy for government to inform private sector
* Economic research and intelligence
QUESTIONS
A delegate commented on TISA. Mr Kolane explained that TISA’s role was to attract foreign investment into South Africa only. The DTI takes TISA projects and showcases them as they network around the world.
Busisiwe Ngwenya, the SME Liaison Officer, Competition Commission
Black owned, black controlled and black influenced – how do the regulatory authorities assist black business?
* Provide opportunities for SME’s and BEEs to compete in an equitable environment – leveling the playing field
* Promotes access to markets and reduces barriers to entry
* Definitions of anti-competitive conduct
* Procedures to follow to lodge a complaint can be found on the website
* Exemptions from the act for the purpose of export promotion, small and black business competitiveness and intellectual property rights
QUESTIONS
The question of the effect of mergers on employees was raised. The impact of job losses will be considered by the Competition Commision, but the labour law section 197 deals with the specific issue of the effect of mergers on employees.
Shadrach Appanna, Economist from the Development Bank of Southern Africa
Preparing black business to excel in Public Private Partnerships (PPPs).
* business profiles that demonstrate careful thought and stratetic planning
* business mission, vision, values and skills
* detailing shareholding structure
* staff profiles and skills
* alliances, joint venture partners, good trading references
* demonstarting corporate governance issues (VAT registration, tax numbers, company registration number, a board, key accounting personnel)
* linking the key strenghts of the business to the tender criteria
detail abilty to deliver
* demonstrating a good financial track record and understand project financing issues
* write the tender proposal is written as if the tender has been won and the proposal is a document detailing the process the business will follow in delivering on the tender
QUESTIONS
A delegate commented that demanding such information leads to being called a “trouble maker”. Mr Appanna replied that there are legal process in place to ensure the rights of the public are respected and that litigation is an option if necessary.
* Tender process is incorrect and it seems that tenders are awarded before they are made public, thus it is a waste of the private sector’s money and time to tender
* Bribes and corruption is rife – marginalising the smaller companies who cannot afford to pay bribes or buy gifts
* Once a tender has been awarded and the project finished, payment is not received for months
* There is no resource of information regarding the rights of business, recourse if the rights are infringed
* Business must stand up, speak out and stand on their rights
* Nothing comes for free – business must work for their opportunities and make the opportunities work
Alun Frost, Chief Investment Officer, Private Equity, National Empowerment Fund Corporation
Improving access to funding for black business
Mr Frost suggested that the entities who can make a difference in the environment in which black business operate should be lobbied constructively. The entities include:
* government and the various departments,
* parastatals,
* development finance institutions,
* municipalities,
* foreign donors,
* corporates.
* be prepared,
* know what they want
* present a strong management team
* be clear on his own personal aspirations, the objectives for the business and what he or she wants from the potential investor
* be prepared to answer why the business has approached a particular investor
* use access to advisers such as Namac (operating entity within the DTI that can assist with business plans and positioning issues) and Ntsika
* know the investor
* background of the organisation
* successes and failures
* who you will meet with
* investment criteria (and make sure you adhere to it)
* BEE mandate
* decision making process and the time frame involved in an investment decision (the average time for an equity investor to invest in a private business is about 8 to 12 weeks).
* sound, honest management and a good track record
* passion and energy of a management team that works well together
* the skills necessary to deliver on plans
* sustainability and prudent assumptions
* how risk can be limited
* cash flow generation as soon as possible
* how, when and how much return on investment can be expected
* a stable management during investment period
* demonstrate credibility and ability by citing previous and current relationships – suppliers and customers, advisers, accountants etc.
* commitments from supplier and customers.
* Don’t be anxious or arrogant, but be confident.
* Don’t play investors up against each other
* Don’t give up if turned down – listen to advise and feedback.
* Ask questions and get reasons.
* Paramount is the ability of management, the quality of the business and the prospects for sustainability and chemistry between the investor and the entrepreneur.
QUESTIONS
In response to a question from a delegate, Mr Frost said that the National Empowerment Fund Corporation has R200 million in funds available and has funded 1 project to date, with 3 to 4 in the pipeline for this year. Project funding ranges from R3 million to R10 million, no sectors are excluded and the funding will be 50% for start-ups and 50% for established business.
Craig Lyons, CEO, Mvelaphanda Strategic Investments
Case study: Black Empowerment specific funding: Mvelaphanda strategic investments
Dave Botha, Marketing Executive, IBM
Bridging the Digital Divide
* Education - More black students with Science and Engineering degrees are needed globally, students skilled in maths and science need to be nurtured, more involvement of women and girls in IT
* Access to and use of technology – the gap between white and black usage is vast
* Job opportunities in IT – black people only form a small percentage of workforce and a hige shortage of IT workers expected in the next 10 years.
* Mentoring – a collaboration model
* Within and outside your business
* Business leaders mentoring Educators and students
* Family involment
* Encouraging math and science skills
* Encourage and prepare your children for IT carreers
* Support teacher training & professional development
* Embrace technology and use it in business and everyday live
* The competitive advantage is knowledge, not natural resources.
* The Business environment is open, competitive and a place to share knowledge.
* Expansion comes through rapid reinvention
* Process related work is outsourced
* The market is global
* Decision making must be collaborative
* Human resources, information and technical infrastructure are the key assests
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